Alibaba names new CEO, tops estimates

GillianWong

BEIJING-- Alibaba Group Holding Ltd. unveiled a broad management shuffle that included a new chief executive and a younger generation of leaders, as it reported a better-than-expected 45% increase in March quarter revenue on continued growth in mobile transactions.

The Chinese e-commerce giant said on Thursday that Daniel Zhang, currently chief operating officer, will become CEO of Alibaba, effective Sunday. Current CEO Jonathan Lu will work with Mr. Zhang during the transition and remain on the board as vice chairman.

In a letter to employees, Executive Chairman Jack Ma said the move was part of a broader effort to bring younger leaders into the company. Others who are changing responsibilities beginning May 10 include its technology chief, Wang Jian; Shao Xiaofeng, its chief risk officer; Zeng Ming, its chief strategy officer; and Wang Shuai, its chief marketing officer, the letter said.

Referring to people born in the 1970s, Mr. Ma wrote, "this marks a future where the post-70 generation will command the troops at Alibaba Group!"

A spokesman said those executives changing responsibilities will take new roles in the strategic decision committee.

Mr. Zhang first joined Alibaba as chief financial officer of its Taobao Marketplace online sales platform in August 2007 and became chief operating officer in September 2013. Alibaba said Mr. Zhang was a key architect of the Nov. 11 shopping event in China known as Singles Day, helping it to become the world's largest online shopping event.

The management shift comes as Alibaba has grappled with the transition to mobile and increased scrutiny of its operations in the U.S. and China, even as it has continued to report increases in revenue and transaction volume. Alibaba raised $25 billion in September from U.S. investors in what was the world's largest initial public offering.

Overall, for the fourth quarter, Alibaba's earnings fell 49% to $463 million, or 18 cents a share, mainly because of employee stock awards. Excluding items such as the stock grants, per-share earnings rose 7% to 48 cents a share. Revenue was $2.81 billion.

Analysts, on average, were expecting earnings of 42 cents a share on revenue of $2.77 billion, according to Thomson Reuters.

Shares of the Chinese e-commerce giant jumped 10% to $88.15 in premarket trading Thursday following the better-than-expected results.

For the March quarter, mobile transactions accounted for 51% of Alibaba's overall transactions, up from 42% in the December quarter and 27% from a year earlier. The number of active users on Alibaba's mobile platforms rose to 289 million in March, up from 265 million in December and from 163 million a year ago.

At the same time, Alibaba said it was making less in revenue than before in terms of the percentage of value of mobile transactions. The company's mobile monetization rate--a measure of how much in transaction value turns into revenue for the company--fell to 1.73% in the quarter ended in March, from 1.96% in the December quarter and 1.87% in the September quarter.

A spokesman said the figures are seasonal and that the March quarterly figure beat expectations. Alibaba's ability to boost revenue from its mobile platforms has been scrutinized as more Chinese Internet users go online from their mobile devices.

During the quarter, Alibaba was criticized by a powerful Chinese government agency for allegedly turning a blind eye to counterfeits on its Taobao sales platform, an accusation Alibaba disputed. The agency pulled the report containing the allegations from its website shortly after putting it up in January, a move Alibaba said it saw as vindication.

Alibaba said that on its China retail marketplaces, gross merchandise volume for the quarter increased 40% and annual active buyers rose 37% year-over-year.

Alibaba said it had $19.74 billion in cash as of March 31, down from $21.07 billion as of Dec. 31.

Through its Wednesday close of $80, the stock has risen 18% since its initial public offering price of $68 in September, although it is off its high of $120.

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